UK Households' Finance Situation Deteriorates In August

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UK households’ perception about the financial well-being deteriorated in August, survey data published by IHS Markit showed Monday.

The household finance index fell to 40.8 in August from 41.5 in July.

Households in the UK remained highly pessimistic of their financial wellbeing over the coming 12 months as the index remained firmly below the 50 neutral mark.

The survey showed that households reduced their overall spending. Although the rate of decline eased from July, the fall was still sharp. Households were expanding credit facilities such as overdrafts and credit cards.

Data highlighted another reduction in income received from employment, with the latest decline sharp, despite easing further from May’s record drop. Households said workplace activity declined in August.

According to latest survey, two-thirds of survey respondents expect interest rate to rise by August 2022. Over one-fifth of households surveyed forecast another rate cut at some time.

“Overall, the data hint at some worrying trends when put in the context of the significant recession facing the UK,” Lewis Cooper, an economist at IHS Markit, said.

“Although lockdown measures are looser; households are spending less, earning less and unsure about their jobs, all of which has the ability to add severe friction to the pace of the economic recovery,” Cooper added.

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